Billionaire Warren Buffett Just Sold More Than 46.3 Million Shares of 2 Favorite Stocks and Piled Into This Ultra-Safe Asset

Warren Buffett may be retiring at the end of 2025, but he is still fully in charge of the Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) stock portfolio today. The 95-year-old investor runs Berkshire Hathaway, with its trillion-dollar market capitalization, building the insurance- and stock-focused conglomerate from a tiny company 60 years ago to a force in the financial world today.

During the past few years, Buffett has begun selling off some of his major stock holdings to raise cash, piling into U.S. Treasury bonds in the process. Last quarter, he sold 46.3 million shares of two of his favorite positions. Should you follow Buffett by trimming your own stock portfolio and buying short-term Treasuries?

Diminishing Apple stake

One of the best investments Warren Buffett ever made is Apple (NASDAQ: AAPL). After purchasing shares about a decade ago, Berkshire Hathaway ended up with about 5% of the smartphone maker and rode the stock up to a whopping $175 billion valuation, at least as of the end of 2023.

Since the end of 2023, Buffett has begun to sell pieces of his Apple stake. Last quarter, he sold another 20 million shares, with the stake now at $57 billion even though Apple stock keeps climbing. Berkshire Hathaway now owns less than 2% of Apple's shares outstanding.

Why would Buffett trim Apple? Likely because of the stock's increasing valuation and decreasing growth prospects. Apple has a price-to-earnings ratio (P/E) of 39, which is well above what Buffett likes in a stock -- his typical range is 5 to 15 -- and even above the S&P 500 index average of 31 right now. This valuation places large expectations on Apple's future growth.

That growth has not materialized recently. During the past three years, Apple's revenue is up a cumulative 5.4%, growing significantly slower than other large technology peers. Combine that with a high P/E, and you can see why Buffett has begun to sell Berkshire's stake in Apple stock.

Image source: The Motley Fool.

Trimming a large banking position

The third largest position in Berkshire Hathaway's stock portfolio is Bank of America (NYSE: BAC). It's one of the largest banks in the U.S. with close to $2 trillion in total deposits. Buffett made an investment in the company during the 2011 market downturn, eventually owning 12% of its shares outstanding by the end of 2022.

Buffett saw Bank of America as a cheap financial stock in a time of turmoil. In 2011, the business was unprofitable, but has since gotten back on even footing and generated positive earnings per share (EPS) in each of the past 10 years, growing 156% during that timeframe. Last quarter, Buffett reduced his position in Bank of America by 4%.

Why is Buffett still selling Bank of America when Berkshire Hathaway already has a gargantuan cash pile? Like Apple, this is due to Bank of America's elevated valuation. The stock now trades at a price-to-book (P/B) of 1.4, a key valuation metric for a banking stock. Anything above 1 means that Bank of America is valued at more than the equity reported on its balance sheet. On top of this, digital banks such as SoFi Technologies are bringing in new competition for consumer banking, taking deposits from legacy players like Bank of America.

BRK.B Cash and Short-Term Investments (Quarterly) data by YCharts.

Should you follow Buffett into Treasuries?

Instead of piling into different stocks, Buffett is taking the cash raised from selling Apple and Bank of America shares and buying short-term Treasury bonds issued by the federal government. After the Federal Reserve raised interest rates beginning in 2022, holders of Treasury bonds have received higher annual interest rates. Even though interest rates have begun falling, the three-month Treasury bond is still yielding about 4% as of this writing.

Berkshire has cash and equivalents of more than $300 billion, much of which is in short-term U.S. Treasuries. This should tell investors that he thinks the risk-free return of about 4% offered by these bonds is a better investment than most stocks today, even his existing holdings like Apple and Bank of America that he has begun to trim.

Should you follow Buffett and buy some Treasury bonds? This is a personal question that depends on your financial situation. If you hold a lot of growth and artificial intelligence (AI) stocks, it might be smart to diversify and add some Treasuries to balance out your portfolio. This can be easily done through exchange-traded funds (ETFs) with low annual fees, which make it easier for individual investors to obtain exposure to the bonds.

Don't get too caught up with soaring stocks in a bull market. Perhaps it is time to follow Warren Buffett and diversify with Treasury bonds in your investment portfolio.

Bank of America is an advertising partner of Motley Fool Money. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.